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CONDOMINIUM OWNERSHIP

In all those years I am in Canada I have bought, owned and re-sold my homes. After the very first one duplex that we rented, me and my little son. But not for long. In Alberta, homes with land. Not in all those years have I made any profits on it. Typically, buildings depreciate, while land appreciates. But all depends on location and demand. More than often locations where infrastructure is being developed will appreciate faster. Unluckily, I had sold land before the great boom in land prices and before an area near that piece of land would be revitalized. Condo’s or Condominiums – share ownerships in a condo corporation – whereby shareholders own a portion of the building, the grounds and have their own little suite where they can live and renovate, improve, or more likely maintain and repair. Advice is only given here based on my own experienced. The market is not only dependent on supply and demand, but also on fluctuations in the overall financial markets. One of the real frustrating concepts in condo ownership is twofold: (a) loss of control over one’s investment; (b) cost sharing.

[referred to as: “mitgefangen, mitgehangen” – meaning, if a large repair is needed for a condo building, then all owners must share the cost]. For larger and especially older buildings this can become very costly. Moreover, if a property management company had been in control for years and either mismanaged funds or neglected the upkeep of the building, or both. Example: Of the four condominiums I had owned and re-sold three of them meanwhile, the last I still live in has been a disaster. My out of pocket cost I paid for my share has been let’s say $240,000 in an area where most condo’s go for much more usually. The last assessed value is pegged at $25,000 for the building – as per 2013. The major balance of assessed value is for the land.

The ‘new kid on the block’ that came along is the DEPRECIATION REPORT. That’s now standard for all older condominium buildings. At least here in BC, Canada. Pretty straight forward: Estimate the cost of all facilities and assets of the building, the improvements inside and out, and then look forward for the next 10 years or longer, what needs to be replaced. Prepared mostly by engineering firms who simply estimate all repairs, replacements and maintenance to all building systems and facilities in order to budget the cost for these, to be born by the owners of the condo building and lands. These predicted estimated cost fore casts can largely exceed the assessed value of the property. When only considering the building. At a certain benchmark – let’s say 5 years from preparing the Depreciation Report – when all predicted costs to keep the building ‘alive’ far exceed the assessed value of the building at that time, then the decision should be made to sell out to a developer, land value only.

If I were in a position of funds to permit myself NOT to live in a condo, I would run as fast as I can away from this unfortunate concept of ownership.